Coffee spilled on a laptop. A malfunctioning weight machine at the gym. A piece of overzealous lawn equipment that shoots a rock at a customer’s car. Any of these things can make for a bad day on the job, but if a customer decides to sue your business for damages, you could be wishing for something as mild as a “bad day.”
So just how common are customer injuries and property damage? According to a 2015 study released by The Hartford, these types of incidents are the sixth leading cause of small business insurance claims. And while that means they account for less than five percent of all small business claims, they tend to be costly, clocking in at $30,000 each on average.
Commercial Insurance Policies for a Risky Business
According to James Goodnow (@JamesGoodnow), injury lawyer with Lamber Goodnow Injury Law Team (@LamberGoodnow), property damage and personal injury claims tend to be expensive. Because of that, he emphasizes the importance of having a General Liability policy that’s up to the task.
“Having the right amount of Commercial General Liability Insurance is critical,” he says, “especially when operating a business that involves high-traffic consumer situations.”
He notes that for some businesses, supplementing General Liability coverage with a Commercial Umbrella Insurance policy is a savvy way to ensure adequate protection in the event of a claim.
How do you know if you’re one of these higher-risk businesses? “If your business is a place with animals or banana peels or a gym with lots of equipment, you need to be even more vigilant in terms of inspecting regularly – and fixing any problems quickly,” Goodnow says.
In some industries, he points out that it’s wise (and common) to require customers to sign a waiver and to post warnings noting that the tasks at hand may be dangerous. Think about the last time you joined a gym – chances are you signed a form waiving your right to sue.
But Goodnow warns that waivers are not always a sure bet. “State laws vary as to the requirements for these waivers and their enforceability,” he says. Translation: waivers are in no way a replacement for carrying adequate small business insurance.
5 Ways to Reduce Your Risk of Customer Injury & Property Damage
To keep your exposure to expensive customer injury and premises liability claims to a minimum, it’s a good idea to proactively eliminate certain hazards. Try implementing some of the following strategies:
- Get in the habit of inspecting your premises for hazards (and address anything you notice immediately).
- As soon as you detect a problem or hazard, post warning signs for your customers.
- Set a schedule for checking, cleaning, and maintaining your tools and equipment.
- Document your findings and any repairs or tune-ups you do so you know when to expect the major cost of buying new gear.
- If appropriate, have customers sign waivers after informing them about the risks associated with your business.
This post is part of a series on the most common and costly small business insurance claims on the books. Check back in the coming days for more information on how you can keep your business safe and profitable.